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Biotech / Medical : HBOC...Buy in here?
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To: Chuzzlewit who wrote (307)11/9/1998 7:27:00 PM
From: Rob Pierce  Read Replies (1) of 341
 
HBOC + MCK thoughts

I'm inclined to agree that HBO will be the true successor.

One item that occurs to me that differs from the original merger
proposal (and I admit this is relatively minor) is that with McKesson
being the acquiror the resulting stock will trade on the NYSE, not the
NASDAQ. If nothing else, it should make the stock less volatile.

One thing I noticed about McKesson is that it pays a descent dividend
(50c/shr per year over the last three years).
wsrn.com

By comparison, HBO has done 2c/shr per year over the last six years.
wsrn.com

My guess is that that dividend may shrink as the combined company
continues to expand on the data side, using the excess cash to fuel
further growth via acquisitions rather than returning it to
shareholders as dividends.

And lastly, although some have questioned whether a combination of a
distributor (MCK) with a computer services house (HBOC) is a good fit,
I think >both< companies may have looked at Cardinal Health as their
common rival. Cardinal will not only vault into the lead over
McKesson as the largest distributor with it's acquisition of Alliance,
but Cardinal also has a data division of it's own (though I don't know
if HBO counts them as a significant competitor or not).

Just a few ideas to chew on.

Rob Pierce
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